The Psychology of Pricing

Pricing your products can feel like one of the most challenging parts of running a business. Too high, and customers may hesitate. Too low, and you risk leaving money on the table — or even devaluing your brand.

Understanding the psychology of pricing and choosing a strategy that fits your product and industry can make a big difference in sales and growth. Let’s break it down.

Why Pricing Psychology Matters

People don’t always make decisions based purely on logic — emotions, perceptions, and mental shortcuts influence how they feel about a price. Smart pricing taps into these psychological tendencies to encourage purchases, increase perceived value, and build trust.

Common Price Strategies

1. Prices Ending in 9 or 5

You’ve probably noticed prices like $19.99, $9.95, or $49.99 everywhere. This is called charm pricing, and it works because:

• People focus more on the first digit than the last (so $19.99 feels closer to $19 than $20)

• It gives the impression of a deal or bargain

• It can increase sales, especially for lower to mid-priced products
  
  
  

Keep in mind: Use prices ending in 9 or 5 for items where customers compare similar products and are sensitive to perceived value.

2. Round Numbers ($20, $50, $100)

Round numbers are associated with premium quality. They give a sense of simplicity, clarity, and prestige.

• Ideal for high-end products or luxury services

• Creates a perception of higher value

• Works well for customers who care about status or quality more than bargains
  
  
  

Keep in mind: Use round numbers when your goal is to communicate quality, reliability, or professionalism.

Pricing involves more than just numbers — it’s about having a real strategy. One of the most popular approaches for small businesses is price skimming, and it’s the one I recommend if you’re just getting started.

Let me tell you a bit about it…

3. Price Skimming

Price skimming is a strategy many new brands use to enter the market strategically. Here’s how it works:

1. Start with a lower price to attract early customers and build your audience

2. Use the initial sales to gain trust, reviews, and market awareness

3. Gradually increase your prices as your brand grows and demand increases
   
   
   

This approach allows small businesses to gain traction without scaring away potential buyers, while also leaving room to increase revenue as your audience becomes loyal.

Example: A new skincare brand might launch a popular serum at $25 to attract customers. As the brand becomes recognized and trusted, the price may rise to $40 over time.

Now, here’s a simple way to categorize prices when you don’t have experience in the market yet.

• Everyday items or low-cost products: Charm pricing (ending in 9 or 5) often works best.

• High-end products or services: Round numbers communicate quality and exclusivity.

• New businesses entering a competitive market: Price skimming helps build a customer base and credibility.
  
  
  

Pricing is more than math — it’s psychology. The right price strategy depends on your product, audience, and stage in the business lifecycle.

By understanding the psychology behind pricing, you can make smarter decisions that attract customers, build trust, and increase revenue.

Extra Tip: Make Marketing Easier with Bluumly

Once your pricing strategy is set, marketing your products effectively is the next step. Bluumly helps small shops create high-quality posts, schedule them at peak times, and reach your audience without the stress of guessing what works. With the right pricing and the right marketing, your store is set for success.